Paul Krugman's column today was a little off-base, I think. He basically calls out Sen. Barack Obama for not including a mandate in his universal health care plan, which he thinks will make insurance much cheaper.

I think his claims are overblown. The best estimate I've seen puts health care cost overruns at $480 billion. About $100 billion was due to inefficiencies in the insurance system on its own, and administrative expenses and profits make up the bulk of those unnecessary expenses. And I haven't seen anything on how being uninsured significantly raises costs in the delivery system.

Inadequate risk-pooling seems less a source of waste than just a more equitable way to finance health care. It could bring down costs for some people, but the main reason health care is so expensive for everyone isn't that we don't have universal health insurance, per se- it's that health care purchases aren't being effectively managed. The fact of the matter is that no candidate for president I'm aware of has accepted this and proposed to address it head on.

Krugman cited CBO director Peter Orszag's work on health care in an excellent recent column about Social Security. Orszag has been on the warpath describing what's really going on in the health care system, as best people know. Krugman should read Orszag's work more carefully.

The Center on Budget and Policy Priorities has another important fact sheet up, this time on the Food Stamp program. Congress is considering leaving the program, which is up for reauthorization in the Farm Bill, unchanged. Work on the Farm Bill in the Senate has ground to a halt, and some folks in Congress are suggesting that they revisit the program the next time it comes up for reauthorization- 5 years from now.

But as the paper makes clear, the increasing price of food, and eroding value of food stamp benefits, will make a straight reauthorization equivalent to a budget cut. In addition, a straight reauthorization would fail to address the emergency food crisis facing food banks and their clients, since the House-passed changes to The Emergency Food Assistance Program would be taken out of the bill, too.

This is infuriating. Like the SCHIP funding increase, whether you support this bill or not is more or less a test of whether you're a human being. Well, maybe that's going a little too far, but they could have picked some other bills to make their precious political statements, but they didn't, because they think they can get away with picking on low and moderate-income people. Hold them accountable!

The Washington Post's Ruth Marcus has a column today on Social Security and fixing it.

The column's more or less in response to this Paul Krugman column where he objects to addressing Social Security's projected shortfall now.

If Marcus believes Social Security needs fixing, fine. But she should then devote far more columns to projected health care costs, which is an even bigger problem and demands greater effort to solve it, yet policymakers aren't really paying attention to it. This is what CBO basically recommends.

CQ (no subscription) is reporting that health care advocates are abandoning the SCHIP funding increase and asking for a one-year extension that maintains the level of service being offered now. Some states may not have enough money to provide insurance to everyone enrolled now if Congress doesn't do something soon.

When you're faced with a choice between the President's request to cut SCHIP and a one-year extension, I can understand choosing the latter. The question is, has it come to that? Bush and the Republicans do seem so stubborn that there's no chance of a reasonable compromise, and I doubt the Democrats will outfox them.

The Center on Medicaid and Medicare Services (CMS), an agency in the US Department of Health and Human Services, just released a plan to make Medicare's payments to hospitals more efficient. This plan, which needs authorization from Congress to be implemented, would address one aspect of the rise in health care costs, the main driver of the long-term budget shortfall and most likely the biggest source of governmental waste now.

This plan seems to have potential, and I'd leave it to the government performance experts to evaluate it properly. It's limited mostly by design, because it would only impact payments to hospitals and seems to put less emphasis on letting people know about the comparative effectiveness of different treatments. More comprehensive plans are probably needed for all parts of the system.

Maybe they think it will get them attention. Why else would presidential candidates as diverse as John Edwards and Fred Thompson raise the issue of Social Security, a program that almost no one among budget policy experts seriously believes is in imminent trouble?

In "Edwards, Thompson Say U.S. Must Ward Off Crisis in Social Security Funding," Bloomberg.com reports the latest alarm sounded on the issue:

On CNN's Late Edition, John Edwards declared, "Social Security is an enormous issue facing this country" and recommended some tax hikes "in order to keep Social Security solvent in the future."

Thompson said on ABC's This Week yesterday that "the country can't afford to 'let the bottom fall out' from the program in the next three decades."

The Social Security Trustees' most recent report indicates that program is guaranteed to remain solvent for the next 34 years even if no change is made to it.

For a thorough and sober-minded critique of the "general Washington political discussion of Social Security," see: A Taxing Matter.

CongressDaily ($) is reporting that the two reauthorizations that have funding increases for human needs programs -the Farm Bill and SCHIP- aren't going anywhere anytime soon. Negotiations over SCHIP have broken down, and the Senate failed to close off debate on the Farm Bill. We'll have to wait until after Thanksgiving to try again.

This is all pretty demoralizing, particularly given the yesterday's failed vote to override the Labor/HHS veto. Keep in mind that Bush's strategy is in part to demoralize us. It titillates the conservative base when a progressive agenda is frustrated, particularly on spending and tax issues. But nobody else is amused. The American public is by all measures I've seen behind these spending proposals and furious with the President and his supporters for opposing them.

P.S. This could make you feel better- the Coalition on Human Needs wants you to hold your representative accountable for their votes on Labor/HHS.

A good article on health care cost issues from the American Prospect.

It's a review of three new books on health care that are broadening the debate over health care costs outside the context of the long-term fiscal challenge. For years health care policy people have focused on insurance as a cure for all that ails the health care system, overlooking the cost-inefficiencies of the delivery system. Only recently has there been a good discussion. This discussion is now having a spill-over affect on fiscal policy, which is pretty awesome.

CBO just released an impressive document on health care costs and long-term fiscal issues. It includes:

• A more realistic projection of health care costs, absent changes in federal law
• The relative importance of an aging population, health care costs, and social security costs
• A systematic explanation of the rise in health care costs and its value
• A discussion of possible remedies to excess health care costs

It's encouraging that CBO's examination of health care costs is becoming more sophisticated and detailed. They have clearly shifted a considerable amount of resources into studying health care, and hopefully the think tanks, policy experts and lawmakers who control the debate over long-term fiscal issues will do likewise. Addressing health care costs, after all, is much more important than addressing forecasted shortfalls in Social Security.

Posted by Matt Lewis, 11:44:59 AM

Wednesday, November 07, 2007

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